Business Directories

Barclays fined $44m over gold prices 'fix'

London, May 24, 2014

Barclays has been fined £26 million ($43.8 million) for failures in internal controls that allowed a trader to manipulate the setting of gold prices, just a day after the bank was fined for rigging Libor interest rates in 2012.

Britain's Barclays is the first bank to be fined over attempted manipulation of the 95-year-old London gold market daily "fix", although a source familiar with the fine said it was a one-off and not part of a wider investigation into gold price rigging.

It marks another blow to Barclays' attempts to put past problems behind it.

The Financial Conduct Authority (FCA) said yesterday there were failings at Barclays from 2004 until 2013, but the key event occurred on June 28, 2012, a day after UK and US regulators fined it $450 million over attempted Libor rigging.

"A firm's lack of controls and a trader's disregard for a customer's interests have allowed the financial services industry's reputation to be sullied again," said Tracey McDermott, the FCA's director of enforcement and financial crime.

The FCA said it had banned former Barclays trader Daniel James Plunkett and fined him £95,600 for exploiting weaknesses in the bank's systems.

"Plunkett's actions came the day after the publication of our Libor and Euribor action against Barclays. The investigation and outcomes in that case meant that the firm, and Plunkett, were clearly on notice of the potential for conflicts of interests around benchmarks," McDermott said.

Plunkett fixed the price to avoid the payment of $3.9m to a customer under an option, which boosted his own trading book by $1.75 million, the FCA said. The bank later compensated the client in full.

On the eve of June 28, Plunkett sent an email to commodities colleagues saying that he was hoping for a "mini puke" the following day. The FCA understood this to mean a drop in the price of gold ahead of the fixing.

Plunkett was a director on the precious metals desk at Barclays and was responsible for pricing products linked to the price of precious metals and managing Barclays' risk exposure to those products. The FCA said Plunkett gave the watchdog and Barclays untruthful accounts of his trading activity.

Attempts by Reuters to locate and contact Plunkett online were not immediately successful.

Barclays chief executive Antony Jenkins is attempting to restore the bank's reputation after a series of scandals, but the emergence of past sins are hampering his efforts. He has said its culture, which has been criticised as high-risk, high-reward, had to change and that systems and controls were improving.

"We very much regret the situation that led to this settlement ... these situations strengthen our resolve to improve," Jenkins said in a statement yesterday.

The FCA said Barclays co-operated with the investigation, which reduced its fine by £11 million.

Barclays was the first bank to be fined for attempted manipulation of Libor, although other banks have since been fined more.

Barclays' head of spot gold trading, Marc Booker, left the bank earlier this month as part of the bank's restructuring and its exit from the commodity business.

The Libor rigging scandal has put scrutiny on how all benchmark prices are set, including London's gold "fix", which dates back to 1919.

Banks arrive at the gold fix through matching buy and sell orders during a twice-daily telephone call, which miners, jewellers and central and commercial banks use to trade gold.-Reuters